(Bloomberg) -- The Trump administration announced new sanctions on Russian tycoons, companies and key allies of President Vladimir Putin, hitting the crucial energy sector and adding to a flurry of moves by Western powers against Moscow in recent weeks.
“The Russian government operates for the disproportionate benefit of oligarchs and government elites,” U.S. Treasury Secretary Steven Mnuchin said in a statement Friday. “The Russian government engages in a range of malign activity around the globe, including continuing to occupy Crimea and instigate violence in eastern Ukraine, supplying the Assad regime with material and weaponry as they bomb their own civilians, attempting to subvert Western democracies, and malicious cyber activities.”
Those penalized include seven Russian oligarchs, 12 companies and 17 senior government officials under provisions of a law Congress passed last year to retaliate against Moscow for meddling in the 2016 U.S. presidential election.
Among the most prominent Russian tycoons identified Friday is metals magnate Oleg Deripaska, the billionaire founder and majority shareholder of En+ Group. Deripaska, 50, made headlines last year due to his links to Trump’s former campaign manager, Paul Manafort. The tycoon has had difficulties in the past in getting a U.S. visa.
Deripaska’s En+ Group is the largest operator of Siberian power plants with a major stake in Russia’s biggest aluminum producer Rusal. Companies Deripaska controls were also sanctioned, including En+ Group and GAZ Group, Russia’s leading manufacturer of buses, in which he holds an 83 percent stake.
Shares in Rusal dropped 11 percent after the announcement, while his recently listed En+ holding company dropped 20 percent. The ruble was little changed on the news.
President Donald Trump has been criticized by Republicans and Democrats for doing little to punish Russia for interfering in the U.S. election and for being slow to act on the sanctions law. An investigation by Special Counsel Robert Mueller into whether Trump’s campaign colluded with the Russian government has cast a shadow over his presidency, though Trump denies the accusation.
The U.S. move comes days after Trump expelled 60 Russian diplomats for the nerve-agent poisoning of a former Russian spy in the U.K. Trump last week reiterated his assertion that “there’s nobody been tougher on Russia” than he has. He added in an April 3 news conference that “getting along with Russia is a good thing” but “there’s also a great possibility that won’t happen. Who knows?”
After the sanctions announcement, Russian officials vowed to retaliate. “This is an unfriendly act and we must respond, whether we do that tit-for-tat or in some other way is something we need to think about,” said Andrei Klimov, a member of the upper house of parliament. “The harm inflicted should be comparable,” he said, suggesting that cooperation in areas like aerospace and nuclear power could be targeted.
The sanctions hit close to home for Putin, with Kirill Shamalov, identified as the Russian leader’s son-in-law, designated for his work in the energy sector. Treasury noted that Shamalov, 36, joined the ranks of the “billionaire elite around Putin.”
“It’s designed to communicate seriousness and really up the ante with Russia,” said Elizabeth Rosenberg, a former Treasury official who is a senior fellow at the Center for a New American Security. “By naming a number of oligarchs and state entities, including in the energy sector, it’s meaningful because they’re aiming at sensitive industries in Russia that generate a lot of revenue.”
In his statement unveiling the sanctions, Mnuchin added that Russians “who profit from this corrupt system will no longer be insulated from the consequences of their government’s destabilizing activities.”
The U.S. in January identified 210 wealthy Russians, top officials and business leaders for a list required under the law, but Mnuchin has said that Treasury would use a classified portion of that list to establish penalties.
Other tycoons identified by Treasury on Friday include:
- Suleiman Kerimov, 52, a Russian senator and billionaire investor who’s facing money-laundering charges in France. He’s denied any wrongdoing but has agreed not to leave France. Kerimov’s son, a student in Moscow, controls 82.4 percent of Polyus, the biggest gold producer in Russia. The Moscow-based company produced 2.2 million ounces of gold in 2017 and has rights to more than 70 million ounces in proven reserves.
- Viktor Vekselberg, 60, chairman of Renova, a diversified investment group that has a stake in United Co. Rusal, Russia’s biggest aluminum producer. The Bahamas-based company also owns shares in equipment makers Sulzer and Oerlikon. He owns regional airports in Russia.
- Gazprom PJSC CEO Alexey Miller, 56, who’s been running the world’s largest natural gas producer since 2001 is a long-term ally of Putin. While Gazprom hasn’t been targeted by U.S. or European sanctions, its oil arm Gazprom Neft PJSC faced financial curbs over Russia’s involvement in Ukraine in 2014. Another state-run energy giant, Rosneft PJSC, was also sanctioned by the U.S. along with CEO Igor Sechin over Ukraine four years ago, though it hasn’t prevented the company from continuing foreign operations.
Trump’s national security team has pressed for stronger action against Putin following the nerve-agent poisoning, though that attack wasn’t mentioned in Mnuchin’s statement. Going beyond Trump’s predecessor, Barack Obama, the U.S. administration had previously supported the sale of anti-tank missiles to Ukraine, which could be used against Russian forces, although the timing of when those weapons would be delivered hasn’t been clear.
Highlighting another key area of dispute with Moscow, Treasury on Friday singled out companies owned by the Russian government for contributing to the instability of Syria “through the sales and transfer of Russian-origin military equipment in support of Assad’s regime, enabling Assad to continue carrying out attacks against Syrian citizens,” according to a press release, referring to President Bashar al-Assad. “These attacks have included chemical weapons attacks, which claimed the lives of hundreds of Syrian citizens.”
Sanctioned companies include weapons-trading company Rosoboroneksport and a financial institution it owns, the Russian Financial Corporation Bank.
The U.S. also identified associates of Putin linked to sanctioned banks: Andrey Akimov, 64, CEO of state-run Gazprombank, and Andrey Kostin, 61, head of state-owned VTB Group. Kostin early this year branded the sanctions against Russia “economic war.” The list contains another corporate titan with Kremlin ties, Vladimir Bogdanov, 66, CEO of one of Russia’s top five oil producers, Surgutneftegaz, which has a cash pile of about $40 billion.
Putin’s Childhood Friend
The new limits also targeted top foreign policy and security officials, including Nikolai Patrushev, the secretary of Russia’s Security Council, and the heads of the Interior Ministry and National Guard, as well as the country’s Internet regulator. The list includes Alexander Torshin, a deputy chairman of Russia’s central bank, who was in contact with Trump campaign officials before the 2016 election, and Alexey Dyumin, a former Putin bodyguard who’s now governor of Russia’s Tula region.
The measures also target Igor Rotenberg, the son of sanctioned businessman Arkady Rotenberg, a childhood friend of Putin.
The U.S. announced sanctions March 15 on a St. Petersburg-based “troll farm” and other Russian citizens and entities Mueller indicted in February for interfering in the U.S. election. That sanctions list also targeted individuals and entities the administration said were involved in cyber-attacks, including the 2017 NotPetya attack, described as the most damaging in history.
Trump’s outgoing national security adviser, H.R. McMaster, publicly called for a tougher line against Russia in a speech Tuesday, saying in the face of Putin’s increasing aggression around the world, “We have failed to impose sufficient costs.”
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